Gap Insurance in Oklahoma: Everything You Need To Know In 2024
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New cars often lose around 20% of their value in the first year of ownership. If your car is totaled and you owe more on your loan than what the car is worth, you could be responsible for paying the difference.
Gap coverage is crucial for drivers in Oklahoma to protect against this scenario. Despite my extensive experience in insurance, I’ve noticed that many people don’t fully understand what gap insurance entails. To learn more about how gap insurance works, read on for a detailed explanation.
Key Takeaways
Gap insurance covers the difference in value between what you owe on your car loan and what your car is worth after depreciation.
You have the option to buy this coverage on its own or add it as extra protection to your existing car insurance policy.
Purchasing gap insurance from your auto insurance company is a smart financial decision.
What Is Gap Insurance?
Guaranteed Asset Protection (GAP) insurance is designed to bridge the difference between the current market value of your vehicle and the amount you still owe on your lease or loan. If your car is totaled in an accident, regular insurance usually reimburses you based on the car’s market worth, which might be lower than what you still owe on your loan. GAP insurance covers this financial shortfall.
Based on research from CCC, an insurance software firm, 20% of cars have been declared total losses instead of being repaired since 2018. Given that the average cost of new vehicles climbed to $48,759 by 2023, there’s a notable chance of owing more than the value of your vehicle, especially if your initial down payment was low.
Note: A vehicle is considered totaled when the expense of repairing it exceeds its market worth. Insurance companies often use resources like Kelley Blue Book or NADA to determine the current monetary value of your vehicle.
How Does Gap Insurance Work?
Gap insurance can be illustrated with a real-life scenario: Imagine purchasing a brand-new car priced at $40,000. You make a down payment of $5,000 and finance the rest. Now, if the car gets into an accident and its current value is assessed at $20,000, but you still owe $23,000 on your loan, there’s a shortfall of $3,000.
Without gap insurance, you’d be responsible for covering this difference out of pocket. However, with gap insurance in place, your insurer would step in and cover the $3,000, ensuring you’re not financially burdened by the gap between your car’s value and what you owe.
Remember: Gap insurance applies when the amount you owe on your car loan is higher than its current market value. Once you’ve cleared your loan, the insurance will only reimburse you up to the car’s current resale value.
Where Can I Find Gap Insurance In Oklahoma?
Gap insurance can be purchased on its own or included in your current car insurance policy. When added to your insurance, it’s generally more affordable, typically around $40 to $60 annually. However, standalone gap insurance policies might require an upfront payment ranging from $500 to $700.
Note: Dealerships often include gap insurance costs in your loan, which can increase your long-term expenses, particularly with added interest. A more economical option is to integrate it into your car insurance policy and discontinue coverage once your loan is paid off.
Gap Insurance VS Full Coverage
Gap insurance and full coverage insurance serve different purposes despite both expanding the scope of payouts from your insurer. Gap insurance fills the financial gap between your vehicle’s current market value and the amount left on your lease or loan.
On the other hand, full coverage encompasses comprehensive and collision protections. Comprehensive coverage pays for damages from incidents like fire, theft, vandalism, and animal collisions, while collision coverage specifically covers repairs resulting from your vehicle colliding with another vehicle or object.
| Gap Coverage | Full Coverage | |
| Applicable When the Car is Financed/Leased? | Yes | Yes |
| Required? | No | Yes, if the vehicle is financed/leased |
| Cost? | $61 per year | $2,542 per year |
| Deductible Apply? | Yes | Yes |
How To Buy Gap Insurance In Oklahoma?
Here's a guide on how to purchase gap insurance in Oklahoma.
Decide whether you want to purchase gap coverage separately or add it to your existing car insurance, and then compare the expenses associated with each option.
Look for a reliable Oklahoma-based company that holds a valid license to provide gap insurance. Another option is purchasing this coverage directly from the dealership when finalizing your lease or loan paperwork.
When thinking about gap insurance offered by your auto insurance company, contact them directly to confirm its availability.
Make sure your leased or financed vehicle is covered by insurance.
This list identifies companies approved to offer gap insurance in Oklahoma.
- Allstate
- Midvale Home And Auto
- Progressive
- State Farm
- Travelers
- Auto-Owners
- Gainsco
Do I Need Gap Insurance In Oklahoma?
In Oklahoma, gap insurance isn’t mandated by law. In fact, state regulations prohibit requiring gap insurance for car leases or loans. Despite this, experts recommend considering gap coverage when leasing or financing a vehicle, particularly under specific circumstances.
It’s generally wise to add this coverage to your auto policy if you’re leasing or financing a car, given its reasonable cost. However, if you’re closely managing your finances, you might consider skipping gap insurance if none of the following apply:
- Your down payment was less than 20%.
- Your loan term extends beyond 60 months.
- Your vehicle depreciates faster than average.
- You rolled over a previous loan balance into your new car loan.
FAQs
What does gap insurance cover in Oklahoma?
Gap insurance is designed to bridge the difference between what your vehicle is worth if it’s totaled or stolen, and what you still owe on your lease or loan. Without this insurance, you would be responsible for paying this difference out of your own pocket.
How much is Gap insurance in Oklahoma?
In Oklahoma, the cost of gap insurance depends on how you purchase it: either as its own policy or added to your current auto insurance. Buying it separately typically costs a fixed amount, ranging from $500 to $700. If added to existing coverage, insurers generally charge an additional $40 to $60 annually.
Do I need gap insurance if I have full coverage?
If you finance or lease your car, most lenders will require you to have comprehensive insurance coverage. While gap insurance isn’t always required in these situations, it’s generally recommended.
